JAMES and CHARLOTTE COKER, ROBERT and REBECCA …
Transcript of JAMES and CHARLOTTE COKER, ROBERT and REBECCA …
JAMES and CHARLOTTE COKER, ROBERT and REBECCA DARCONTE, andDONALD and BONITA SHOE, Plaintiffs, v. DAIMLERCHRYSLERCORPORATION, Defendant
NO. COA04-523
Filed: 16 August 2005
1. Pleadings--judgment on--standard of review
Judgment on the pleadings is proper when all of the material issues of fact are admitted inthe pleadings and only questions of law remain. Appellate review of judgments on the pleadingsdetermines whether moving parties have shown that no material issue of fact exists on thepleadings and that the moving parties are clearly entitled to judgment.
2. Appeal and Error–judgment on pleadings–de novo review
Appellate review of a Business Court order granting judgment on the pleadings fordefendant is de novo.
3. Jurisdiction--standing--injury in fact
Standing is a necessary prerequisite to a court’s proper exercise of subject matterjurisdiction; whether standing exists most often turns on whether the party has alleged an injuryin fact in light of the applicable statutes or case law. Plaintiffs here alleged that defendant shouldhave installed brake shift interlock devices on minivans marketed as the safest in the world;however, the sole remedy plaintiffs seek is for possible future expenses not yet incurred. Theirclaims are too speculative and illusory to show a legal injury in fact.
Judge HUDSON dissenting.
Appeal by plaintiffs from order entered 5 January 2004 by
Judge Ben F. Tennille in Rowan County Superior Court. Heard in the
Court of Appeals 25 January 2005.
Mauriello Law Offices, by Christopher D. Mauriello; andWallace and Graham, PA, by Marc P. Madonia, for plaintiffs-appellants.
Smith Moore LLP, by Sidney S. Eagles, Jr. and Allison O. VanLaningham; and Bush Seyferth Kethledge & Paige PLLC, byRaymond M. Kethledge, Troy, Michigan, pro hac vice, fordefendant-appellee.
TYSON, Judge.
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James and Charlotte Coker, Robert and Rebecca Darconte, and
Donald and Bonita Shoe (collectively, “plaintiffs”) appeal order
granting judgment on the pleadings to DaimlerChrysler Corporation
(“defendant”). We affirm.
I. Background
On 8 May 2001, plaintiffs filed an amended complaint against
defendant as owners of model years 1995 through 2000 minivans
manufactured by defendant. These minivans did not include a brake
shift interlock device (“BSI”). Plaintiffs sought damages to
install BSIs, to compel defendant to both notify its customers of
the lack of BSIs and install them, treble damages, attorneys’ fees,
compensatory damages, punitive damages, interest, and costs of
suit.
Plaintiffs’ amended complaint defines a BSI as “a device that
prevents a vehicle with an automatic transmission from being moved
out of ‘park,’ which keeps the transmission from being engaged,
until the driver depresses the brake pedal.” Plaintiffs assert the
BSI ensures that “the vehicle is not inadvertently moved into
reverse or drive, whether by a driver or a passenger, including a
child who may attempt to move the transmission lever while playing
in the vehicle.”
Plaintiffs allege defendant promoted its minivans to be the
“safest in the world” and emphasized their vehicles go “beyond
government requirements to ensure that the best available safety
devices are used to protect its customers.” Plaintiffs argue
defendant intentionally failed to disclose to its customers that
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its minivans for the years stated did not include BSIs. Plaintiffs
assert defendant declined to include BSIs despite both its own
safety leadership team recommending them and that BSIs were
becoming an industry standard. Plaintiffs also allege defendant
continued to market its minivans as “the safest in the world” even
without installing BSIs.
Plaintiffs’ amended complaint sought recovery for: (1)
violations of the North Carolina Unfair and Deceptive Trade
Practices Act (“NC UDTPA”); and (2) common law fraud and demanded:
(1) compensation for their “ascertainable loss” which “includes the
cost of installing the BSI in Chrysler minivans and/or the
difference in value between minivans with the BSI and those without
it;” and (2) defendant “to install the BSI in the minivans of
Plaintiffs and Class members.”
Plaintiffs expressly excluded from their amended complaint any
allegation of personal injury or property damage. Plaintiffs also
did not allege: (1) they had already installed the BSIs and were
seeking reimbursement compensation; (2) they sold, or attempted to
sell, their vehicles at a diminished price; (3) they have ever
“inadvertently moved [their vehicles] into reverse or drive;” or
(4) their vehicles have been damaged by any “inadvertent” shifting
into reverse or drive.
On 15 April 2003, the Chief Justice of the North Carolina
Supreme Court designated this case as a complex business matter
under Rules 2.1 and 2.2 of the North Carolina General Rules of
Practice, and referred it to the North Carolina Business Court
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(“Business Court”). On 20 April 2003, defendant filed a motion for
judgment on the pleadings under Rule 12(c) of the North Carolina
Rules of Civil Procedure. Plaintiffs filed a “motion” and
memorandum in opposition. Following oral argument, the Business
Court concluded: (1) plaintiffs lack standing to bring the action
since they have suffered no injury in fact; (2) the economic loss
rule bars plaintiffs’ claims; and (3) plaintiffs’ claims are
preempted and barred by the doctrine of primary jurisdiction. It
entered an “Opinion and Order” on 5 January 2004 granting
defendant’s motion and dismissing plaintiffs’ claims. Plaintiffs
appeal.
II. Issue
The issue before this Court is whether the trial court erred
in granting defendant’s motion for judgment on the pleadings under
Rule 12(c) of the North Carolina Rules of Civil Procedure.
III. Abandoned Assignments of Error
Plaintiffs voluntarily abandoned assignment of error number
three, regarding preemption by the National Traffic and Motor
Vehicle and Safety Act of 1966, and number four, preemption under
the doctrine of primary jurisdiction. See N.C.R. App. P. 28(b)(6)
(2004). These assignments of error are dismissed.
IV. Standard of Review
[1] Plaintiffs argue the Business Court erred in granting
defendant’s motion for judgment on the pleadings when it concluded:
(1) plaintiffs lack standing; and (2) plaintiffs’ claims are barred
by the economic loss doctrine.
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Under a motion for judgment on the pleadings:
[t]he trial court may consider, “only thepleadings and exhibits which are attached andincorporated into the pleadings” in ruling onthe motion. Helms v. Holland, 124 N.C. App.629, 633, 478 S.E.2d 513, 516 (1996) (citingMinor v. Minor, 70 N.C. App. 76, 78, 318S.E.2d 865, 867, disc. rev. denied, 312 N.C.495, 322 S.E.2d 558 (1984)). “‘No evidence isto be heard, and the trial judge is not toconsider statements of fact in the briefs ofthe parties or the testimony of allegations bythe parties in different proceedings.’”Helms, 124 N.C. App. at 633, 478 S.E.2d at 516(quoting Minor, 70 N.C. App. at 78, 318 S.E.2dat 867).
Davis v. Durham Mental Health/Development Disabilities/Substance
Abuse Area Auth., 165 N.C. App. 100, 104, 598 S.E.2d 237, 240
(2004).
The purpose of Rule 12(c) is “to dispose of baseless claims or
defenses when the formal pleadings reveal their lack of merit.”
Ragsdale v. Kennedy, 286 N.C. 130, 137, 209 S.E.2d 494, 499 (1974);
see N.C. Gen. Stat. § 1A-1, Rule 12(c) (2003). Judgment on the
pleadings is proper when all of the material issues of fact are
admitted in the pleadings, and only questions of law remain.
Ragsdale, 286 N.C. at 137, 209 S.E.2d at 499.
This Court reviews such a grant by determining “whether the
moving party has shown that no material issue of fact exists upon
the pleadings and that he is clearly entitled to judgment.”
Affordable Care, Inc. v. N.C. State Bd. of Dental Exam’rs, 153 N.C.
App. 527, 532, 571 S.E.2d 52, 57 (2002) (citing Garrett v. Winfree,
120 N.C. App. 689, 463 S.E.2d 411 (1995)). “All factual
allegations in the nonmovant’s pleadings are deemed admitted except
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those that are legally impossible or not admissible in evidence.”
Governor’s Club, Inc. v. Governors Club Ltd. P’ship, 152 N.C. App.
240, 247, 567 S.E.2d 781, 786 (2002) (citing Cheape v. Town of
Chapel Hill, 320 N.C. 549, 359 S.E.2d 792 (1987)), aff’d per
curiam, 357 N.C. 46, 577 S.E.2d 620 (2003).
Here, neither party asserts any issue of material fact exists
based on the pleadings considered by the Business Court. Rather,
defendant argues whether the Business Court properly concluded as
a matter of law: (1) plaintiffs lack standing to assert claims
under the NC UDTPA and common law fraud; and (2) the economic loss
doctrine bars plaintiffs’ claims. See Creek Pointe Homeowner’s
Ass’n v. Happ, 146 N.C. App. 159, 164, 552 S.E.2d 220, 224-25
(2001) (whether a complainant has standing is a question of law),
disc. rev. denied, 356 N.C. 161, 568 S.E.2d 191 (2002).
[2] Our review of the Business Court’s order is de novo.
Fuller v. Easley, 145 N.C. App. 391, 395, 553 S.E.2d 43, 46 (2001);
Falk Integrated Tech., Inc. v. Stack, 132 N.C. App. 807, 809, 513
S.E.2d 572, 574 (1999). “Under a de novo review, the court
considers the matter anew and freely substitutes its own judgment
for that of the [court].” In re Appeal of the Greens of Pine Glen
Ltd. P’ship, 356 N.C. 642, 647, 576 S.E.2d 316, 319 (2003) (citing
Mann Media, Inc. v. Randolph Cty. Planning Bd., 356 N.C. 1, 13, 565
S.E.2d 9, 17 (2002)).
V. Standing
[3] “Standing is a necessary prerequisite to a court’s proper
exercise of subject matter jurisdiction.” Street v. Smart Corp.,
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157 N.C. App. 303, 305, 578 S.E.2d 695, 698 (2003) (internal
quotation omitted). “Standing refers to whether a party has a
sufficient stake in an otherwise justiciable controversy such that
he or she may properly seek adjudication of the matter.” American
Woodland Indus., Inc. v. Tolson, 155 N.C. App. 624, 626, 574 S.E.2d
55, 57 (2002) (citations omitted), disc. rev. denied, 357 N.C. 61,
579 S.E.2d 283 (2003). It requires “‘that the plaintiff have been
injured or threatened by injury or have a statutory right to
institute an action.’” Bruggeman v. Meditrust Co., L.L.C., 165
N.C. App. 790, 795, 600 S.E.2d 507, 511 (2004) (quoting In re Baby
Boy Scearce, 81 N.C. App. 531, 541, 345 S.E.2d 404, 410, disc. rev.
denied, 318 N.C. 415, 349 S.E.2d 589 (1986)). “If a party does not
have standing to bring a claim, a court has no subject matter
jurisdiction to hear the claim.” Estate of Apple v. Commer.
Courier Express, Inc., 168 N.C. App. 175, 177, 607 S.E.2d 14, 16
(citations omitted), disc. rev. denied, 359 N.C. 632, 613 S.E.2d
688 (2005). “The ‘irreducible constitutional minimum’ of standing
contains three elements: (1) ‘injury in fact’ . . . ; (2) the
injury is fairly traceable to the challenged action of the
defendant; and (3) it is likely, as opposed to merely speculative,
that the injury will be redressed by a favorable decision.” Neuse
River Found., Inc. v. Smithfield Foods, Inc., 155 N.C. App. 110,
114, 574 S.E.2d 48, 52 (2002) (citing Lujan v. Defenders of
Wildlife, 504 U.S. 555, 560-61, 119 L. Ed. 2d 351, 364 (1992)),
disc. rev. denied, 356 N.C. 675, 577 S.E.2d 628 (2003); Beachcomber
Props., L.L.C. v. Station One, Inc., 169 N.C. App. 820, 823, 611
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S.E.2d 191, 193 (2005). Whether standing exists most often turns
on whether the party has alleged an “injury in fact” in light of
the applicable statutes or case law. Neuse River Found., Inc., 155
N.C. App. at 114, 574 S.E.2d at 52 (citations omitted). As the
party invoking jurisdiction, plaintiffs have the burden of proving
the elements of standing. Id.
A. Injury in Fact
An injury in fact is required for both standing and to support
claims under the NC UDTPA and fraud. An injury in fact is “‘an
invasion of a legally protected interest that is (a) concrete and
particularized and (b) actual or imminent, not conjectural or
hypothetical . . . .” Id. (quoting Lujan, 504 U.S. at 560-61, 119
L. Ed. 2d at 364) (emphasis supplied). To be imminent, an injury
must “proceed with a high degree of immediacy, so as to reduce the
possibility of deciding a case in which no injury would have
occurred at all.” Lujan, 504 U.S. at 564, n.2. The injury in fact
must be “distinct and palpable -- and conversely that it not be
abstract or conjectural or hypothetical.” In re Ezzell, 113 N.C.
App. 388, 392, 438 S.E.2d 482, 484 (1994) (internal citations and
quotations omitted).
B. Scope of Review
Plaintiffs argue three theories as evidence that they have
suffered “injuries in fact.” First, they contend their loss is the
future “cost of installing the brake shift interlock in Chrysler
minivans and/or the difference in value between minivans with the
brake shift interlock device and those without it.” Second,
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plaintiffs assert they are at “a heightened risk of injury” due to
their minivans not including a BSI. Third, they assert their
“injury in fact” occurred upon their purchase of the vehicles.
Under our review of the Business Court’s order dismissing
plaintiffs’ amended complaint, we consider the same allegations and
arguments present at the trial level and properly presented here.
Anderson v. Assimos, 356 N.C. 415, 417, 572 S.E.2d 101, 102 (2002)
(the pleadings have a binding effect as to the underlying theories
of the case); Parrish v. Bryant, 237 N.C. 256, 259, 74 S.E.2d 726,
728 (1953) (“The theory upon which a case is tried in the lower
court must prevail in considering the appeal and interpreting the
record and determining the validity of the exceptions.”); see also
Davis, 165 N.C. App. at 104, 598 S.E.2d at 240 (under a Rule 12(c)
judgment on the pleadings, the trial court considers only the
pleadings before it).
Plaintiffs’ amended complaint fails to allege their last two
arguments on appeal: (1) “heightened risk of injury;” and (2) any
injury in fact upon purchase of their vehicles. State v. Hunter,
305 N.C. 106, 112, 286 S.E.2d 535, 539 (1982) (“The theory upon
which a case is tried in the lower court must control in construing
the record and determining the validity of the exceptions.”)
Our review of plaintiffs’ assertion of an injury in fact is
limited to their sole argument in the amended complaint and before
the Business Court, “the cost of installing the brake shift
interlock in Chrysler minivans and/or the difference in value
between minivans with the brake shift interlock device and those
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without it.” Plaintiffs cannot assert a new and different theory
here. Weil v. Herring, 207 N.C. 6, 10, 175 S.E. 836, 838 (1934)
(“An examination of the record discloses that the cause was not
tried upon that theory, and the law does not permit parties to swap
horses between courts in order to get a better mount [on
appeal].”); see also State v. Sharpe, 344 N.C. 190, 195, 473 S.E.2d
3, 6 (1996) (“[I]t is well settled in this jurisdiction that [a
party] cannot argue for the first time on appeal [a] new ground .
. . that he did not present to the trial court.”), cert. denied,
350 N.C. 848, 539 S.E.2d 647 (1999); see also Anderson, 356 N.C. at
417, 572 S.E.2d at 102 (the pleadings have a binding effect as to
the underlying theories of the case).
C. Plaintiffs’ Alleged Injuries in Fact
Plaintiffs argue they have suffered injuries in fact due to
the future “cost of installing the brake shift interlock in
Chrysler minivans and/or the difference in value between minivans
with the brake shift interlock device and those without it.”
Plaintiffs rely heavily on Coley v. Champion Home Builders Co. as
authority to support their allegation that they have suffered an
injury-in-fact. 162 N.C. App. 163, 590 S.E.2d 20, disc. rev.
denied, 358 N.C. 542, 599 S.E.2d 41 (2004).
In Coley, the plaintiffs purchased a mobile home from the
defendant, a mobile home manufacturer. 162 N.C. App. at 165, 590
S.E.2d at 21. The United States Department of Housing and Urban
Development required “all mobile home manufacturers to designate in
their consumer manual at least one method to support and anchor
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their mobile homes.” Id. at 164-65, 590 S.E.2d at 21. The
defendant set forth in its consumer manuals and instructed
“retailers of its mobile homes to inform purchasers that the homes
are safe and secure when installed with the soil anchor tie-down
system . . . .” Id. at 165, 590 S.E.2d at 21. The defendant made
these recommendations and instructions despite knowing “the soil
anchor tie-down system [was] defectively designed and [did not]
safely secure a mobile home in high winds.” Id.
The plaintiffs in Coley brought suit against the defendant for
unfair and deceptive trade practices under Chapter 75 of the North
Carolina General Statutes, deriving from the misrepresentation.
Id. at 164, 590 S.E.2d at 21. They argued the defendant should pay
“the costs [the plaintiffs] . . . incurred to purchase and install
the defective soil anchor/tie-down system or . . . the costs [to]
retro-fit their tie-down system to one that provides a safe and
reliable method to secure the homes . . . .” Id. at 166, 590
S.E.2d at 22. The trial court granted the defendant’s motion to
dismiss for failure to state a claim upon which relief may be
granted under Rule 12(b)(6), due to the plaintiffs not making a
“sufficient allegation of actual injury . . . .” Id. at 165-66,
590 S.E.2d at 22.
On appeal, this Court determined:
The soil anchor tie-down system specified foruse with their mobile homes is “defective andunreasonably dangerous in that it does notmeet the minimum resistance standards setforth by federal and state regulations.” As aresult of this defect, plaintiffs are exposedto the risk of personal injury and propertydamage during high winds. This risk is
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exacerbated by the fact that Champion has ledplaintiffs to believe that their homes aresafe and secure when the soil anchor tie-downsystem is in use. Plaintiffs have beendamaged by purchasing a system that does notmeet HUD standards, and they will incurexpenses to procure a replacement system toproperly secure their homes.
Id. at 165, 590 S.E.2d at 21-22. “When viewed in the light most
favorable to [the] plaintiffs,” this Court determined the complaint
set forth “a sufficient allegation of actual injury to state a
claim . . . .” Id. at 167, 590 S.E.2d at 22.
Coley is readily distinguishable from the facts at bar.
First, federal safety regulations do not require use of BSIs in
vehicles for the years at issue. Second, defendant never
specifically claimed nor warranted that its minivans were equipped
with BSIs. Third, plaintiffs present no allegations or argument
that defendant’s vehicles are defective without BSIs. Fourth,
plaintiffs admit they did not request, contract for, or even know
about BSIs when purchasing their vehicles. Fifth, plaintiffs
received exactly what they contracted for, a minivan without a BSI.
Sixth, none of plaintiffs ever purchased a BSI or sold their
vehicle at a diminished value. Based on these distinguishing
factors, Coley does not compel reversal of the Business Court’s
order under Rule 12(c).
Plaintiffs cite as persuasive authority Angelino v.
DaimlerChrysler Corp., Case No. GIC 785729 (Ca. Super. Ct., Dec.
11, 2002), Bell v. DaimlerChrysler Corp., Case No. CV003457 (Ten.
Cir. Ct., June 4, 2002), and Solarz v. DaimlerChrysler Corp., Case
No. 2033 (Penn. CCP, Mar. 13, 2002). All three cases are factually
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similar and involve the same alleged injury issue. See Trust Co.
v. R.R., 209 N.C. 304, 308, 183 S.E. 620, 622 (1935) (although we
are not bound by decisions from other jurisdictions, we may find
their analysis and conclusions persuasive in deciding the issue).
In Angelino, the plaintiffs filed a complaint against the
defendant alleging unlawful business practices, unfair and
fraudulent business practices, and fraud for the lack of BSIs. On
the defendant’s motion for summary judgment, the California
Superior Court dismissed the plaintiffs’ claims of fraud and
unlawful business practices for lack of actual loss or injury. The
court allowed the claim for unfair and fraudulent business
practices because California’s statute did not require plaintiffs’
showing actual loss or injury in fact to sustain their claim.
In Bell, the matter before the Tennessee Circuit Court was the
plaintiffs’ requested class certification. The plaintiffs in Bell
filed a complaint against the defendant for fraud,
misrepresentation, and violations of the Tennessee Consumer
Protection Act due to the lack of BSIs in the defendant’s vehicles.
The court briefly considered the issue of whether the plaintiffs
suffered a legally cognizable issue. The Bell court concluded the
plaintiffs “stated a sufficient a [sic] ‘legally cognizable injury’
to satisfy class certification.” The court cited Vance v.
Schulder, 547 S.W.2d 927 (Tenn. 1977) as authority that loss in
value is a legal injury. Our review of Vance shows the plaintiff
in that case actually suffered monetary damages due to the
defendants’ fraud and misrepresentations prior to filing his
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complaint. Like the plaintiffs in Bell, plaintiffs here had not
realized any monetary loss and solely alleged a potential future
injury.
In Solarz, the plaintiffs filed a complaint against the
defendant for breach of implied warranties, breach of express
warranty, breach of contract, breach of duty of good faith and fair
dealing, and violation of the Pennsylvania Unfair Trade Practices
and Consumer Protection Act (“UTPCPA”). The complaint alleged one
of the plaintiffs’ daughter knocked the gear selector from “park”
into “drive” on a minivan manufactured by defendant, causing it to
roll down the street. The Solarz plaintiffs requested the
defendant install a BSI pursuant to warranties received with the
minivan. The defendant refused. The class included other owners
of similar minivans who alleged future injuries of diminution of
value and installation costs. On review of the defendant’s
“preliminary objections” to the plaintiffs’ complaint, the court
determined each plaintiff alleged sufficient “ascertainable losses”
to satisfy the UTPCPA. However, the court noted a UTPCPA claim
“does not fail as a matter of law even where damages are not easily
quantified or where a claim has failed to quantify the damages
suffered.” The court also dismissed the plaintiffs’ remaining
claims that alleged solely future injuries of diminution of value
and installation costs for lack of any actual injury or damages.
Angelino, Bell, and Solarz are each distinguishable from the
facts at bar due to differing facts and the underlying case law and
statutes. The Angelino court allowed the claim for unfair and
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state fraudulent business practices because California’s statute
did not require a showing of actual loss or injury in fact. Case
No. GIC 785729 (Ca. Super. Ct., Dec. 11, 2002). We are not
persuaded the legal precedent in Vance the Bell court cites to find
a “legally cognizable injury” supports that determination and Bell
is not controlling here. Case No. CV003457 (Ten. Cir. Ct., June 4,
2002). In addition, the issue in Bell arose during a class
certification hearing, not during a hearing for judgment on the
pleadings.
Finally, the Solarz court concluded future expenses caused by
a lack of a BSI were an “ascertainable loss.” However, the court
acknowledged Pennsylvania’s UTPCPA did not require quantifiable
damages and it also dismissed plaintiffs’ remaining claims for lack
of damages. These courts considered the injury in fact issue from
the perspective of satisfying the elements of the claims asserted
and not standing. Here, the injury in fact alleged is the same for
both standing and the claims plaintiffs asserted. Neuse River
Found., Inc., 155 N.C. App. at 114, 574 S.E.2d at 51-52 (standing);
N.C. Gen. Stat. § 75-1.1 (2003) (unfair and deceptive trade
practices); Davis v. Sellers, 115 N.C. App. 1, 10, 443 S.E.2d 879,
884 (1994) (common law fraud), disc. rev. denied, 339 N.C. 610, 454
S.E.2d 248 (1995).
After reviewing plaintiffs’ arguments, numerous citations to
authority, and their pleadings in a light most favorable to them
under Rule 12(c), plaintiffs have not alleged a legally sufficient
injury in fact to survive defendant’s motion for judgment on the
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pleadings. Mabrey, 144 N.C. App. at 124-25, 548 S.E.2d at 187-88.
Plaintiffs’ amended complaint demanded
damages in an amount sufficient to repairand/or install brake shift interlock [sic] oneach vehicle, Chrysler to install the brakeshift interlock in the minivans of thePlaintiffs and Class members, and to provideappropriate notice to all Class members of thedangers in the minivans in the absence of thebrake shift interlock.
Plaintiffs did not allege in their amended complaint, before the
business court, or here “an invasion of a legally protected
interest that is (a) concrete and particularized and (b) actual or
imminent, not conjectural or hypothetical . . . .” Neuse River
Found., Inc., 155 N.C. App. at 114, 574 S.E.2d at 52. Plaintiffs
do not assert or allege they incurred expenses or were damaged by:
(1) installing a BSI on their vehicles; or (2) selling their
vehicles and realizing a loss due to the absence of BSIs. In
addition, plaintiffs specifically disclaimed and the amended
complaint contains no allegations of personal injuries or damage to
personal property by plaintiffs.
The sole remedy plaintiffs seek is for possible future
expenses not yet incurred. Plaintiffs’ “damages” are a
hypothetical and an unsubstantiated diminution of value allegedly
caused by a purported “defect” and the cost of “supposed” remedial
measures. Plaintiffs admit none of these alleged “damages” are
realized. Plaintiffs have not suffered a “concrete and
particularized” injury in fact that is “actual or imminent.” Id.
Their claims are too speculative and illusory to show a legal
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injury in fact. In re Ezzell, 113 N.C. App. at 392-93, 438 S.E.2d
at 484-85.
Our holding is consistent with the great majority of other
jurisdictions which have considered identical claims. Ziegelmann
v. DaimlerChrysler Corp., 649 N.W.2d 556, 565 (N.D. 2002) (trial
court did not err in dismissing complaint for failure to plead a
legally cognizable injury); Bowers v. DaimlerChrysler Corp., No. 01
CV 877 (Colo. Dist. Ct., Dec. 23, 2002) (dismissing case because
the plaintiff did “not make any allegation that he sold his vehicle
at a reduced value, or incurred costs to ‘fix’ the problem”);
Ingram v. DaimlerChrysler Corp., No. 01-3684 (Fla. Cir. Ct., May 7,
2002) (dismissing case because the plaintiff failed to “allege
compensable losses, injuries, or damages”); Cox v. DaimlerChrysler
Corp., No. LACV080519 (Iowa Dist. Ct., June 5, 2002) (dismissing
claims because plaintiff failed to allege any legally cognizable
damages); Seim v. DaimlerChrysler Corp., No. CI01-384 (Neb. Dist.
Ct., July 22, 2002) (granting summary judgment in favor of the
defendant and denying class certification because the plaintiffs
failed to allege damages); Marsh v. DaimlerChrysler Corp., Docket
No. MON-L-892-01 (N.J. Super. Ct., May 6,2003) (dismissing case
because the plaintiffs failed to allege any tort injury or
ascertainable loss); Oltmans v. DaimlerChrysler Corp.,
CV-2001-03236 (N.M. Dist. Ct., July 24, 2003) (dismissing case for
failure to allege legally cognizable damages); BP Painting, Inc.,
et al. v. DaimlerChrysler Corp., CIV. 01-350 (S.D. Jud. Ct.,
Yankton County, Mar. 27, 2003) (the plaintiffs’ “claim . . . that
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their vehicle might malfunction and cause injury in the future . .
. is too speculative to constitute a legally cognizable tort
injury”). These great majority of cases represent the better
reasoned approach and are consistent with North Carolina’s
requirement of injury in fact. Neuse River Found., Inc., 155 N.C.
App. at 114, 574 S.E.2d at 52.
VI. Arguments Raised by Dissenting Opinion
Contrary to the dissenting opinion’s assertions otherwise, we
have addressed all issues properly before us on appeal and
applicable to the issue at hand: whether plaintiffs have standing
to assert their claims of unfair and deceptive trade practices and
fraud. Plaintiffs did not argue statutory standing for their claim
of unfair and deceptive trade practices either before the Business
Court or this Court. None of the arguments presented by the
dissenting opinion concerning N.C. Gen. Stat. § 75-1.1 as a
“creature of statute” were asserted by plaintiffs. It is not the
role of this Court to fabricate and construct arguments not
presented by the parties before it. In re Appeal of Mount Shepherd
Methodist Camp, 120 N.C. App. 388, 390, 462 S.E.2d 229, 231 (1995)
(Appellate review is “limited to the . . . arguments presented in
the briefs to this Court.”); Crockett v. Savings & Loan Assoc., 289
N.C. 620, 632, 224 S.E.2d 580, 588 (1976) (“[A]ppellate review is
limited to the arguments upon which the parties rely in their
briefs.”); N.C.R. App. P. 28(a) (2004) (“Review is limited to
questions so presented in the several briefs”).
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The dissenting opinion further addresses the Business Court’s
consideration of the economic loss doctrine. We specifically
decline to address this issue in light of our holding that
plaintiffs lack standing to assert either fraud or unfair and
deceptive trade practices claims.
VII. Conclusion
Plaintiffs bear the burden of proving the elements of
standing. Neuse River Found., Inc., 155 N.C. App. 113, 574 S.E.2d
at 51 (citation omitted). Plaintiffs fail to show they have been
“injured or threatened by injury or have a statutory right to
institute an action.” Bruggeman, 165 N.C. App. at 795, 600 S.E.2d
at 511 (quotation omitted). Plaintiffs failed to assert a present
injury in fact and do not meet the “irreducible constitutional
minimum” of standing to assert causes of action. Neuse River
Found., Inc., 155 N.C. App. at 114, 574 S.E.2d at 52 (quotation
omitted). Without standing, “a court has no subject matter
jurisdiction to hear the claim.” Estate of Apple, ___ N.C. App. at
___, 607 S.E.2d at 16 (citations omitted).
The Business Court properly determined defendant was entitled
to judgment as a matter of law under Rule 12(c). Affordable Care,
Inc., 153 N.C. App. at 532, 571 S.E.2d at 57; N.C. Gen. Stat. § 1A-
1, Rule 12(c). In light of our holding, it is unnecessary to
consider the other issues addressed by the Business Court and the
parties. The Business Court’s order is affirmed.
Affirmed.
Judge ELMORE concurs.
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Judge HUDSON dissents.
HUDSON, J., dissenting.
Plaintiffs here appeal the trial court’s order granting
defendant’s motions to dismiss their claims for violations of
Chapter 75, the Unfair and Deceptive Trade Practices Act (UDTPA),
and for common law fraud. Because I conclude that the majority (1)
has not addressed the issues presented by the appellants, (2) has
misapplied principles of common law standing instead of addressing
whether the pleadings sufficiently allege their statutory claims,
and (3) has filed to follow applicable precedent in disposing of
both claims, I respectfully dissent.
In their Amended Complaint, plaintiffs have set forth numerous
factual allegations, culminating in two substantive claims for
relief for the class they seek to represent. Count I seeks relief
in the form of damages and/or injunctive relief for violations of
Chapter 75, the UDTPA. Among the allegations under this claim are
the following:
76. Chrysler’s wrongful conduct resulted inan ascertainable loss to Plaintiffs and Classmembers. The ascertainable loss includes thecost of installing the brake shift interlockin Chrysler minivans and/or the difference invalue between minivans with the brake shiftinterlock device and those without it.
Count II seeks damages for “Common Law Fraud.”
The briefs to this Court, the order, and the transcript all
refer to defendant’s motion for judgment on the pleadings and
accompanying memoranda to the trial court, but no such motion
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appears in the record on appeal. The only pleading which includes
any such motions is the Answer, which lists some twenty-four
defenses, only a few of which appear to relate to any of the issues
before us. They are:
FIRST DEFENSEPlaintiffs have failed to state a claim upon which reliefmay be granted...
FIFTEENTH DEFENSEPlaintiff’s tort claims and those of the putative classmembers are barred by the economic loss doctrine...
NINETEENTH DEFENSEPlaintiff’s have not complied and cannot comply, with allprerequisites for maintaining a claim under the N.C. Gen.Stat. 75-1.1, et seq...
TWENTY-THIRD DEFENSESome or all of the claims of plaintiffs and members ofthe putative class may be preempted by federal law andregulation.
In the prayer for relief, defendant seeks a “judgment in its favor
dismissing Plaintiff’s . . . Complaint.” The first specific
mention of standing appears in the oral arguments before the trial
court.
First, I do not agree with the majority’s statement of the
standard of review and the issues. It is well established that
upon review of a dismissal on the pleadings, this Court is to
review the pleadings (here, the complaint and answer) in the light
most favorable to the plaintiff, to determine whether plaintiffs
have alleged any legal theory under which they could prevail. “In
ruling on a motion to dismiss under Rule 12(b)(6), a court must
determine whether, taking all allegations in the complaint as true,
relief may be granted under any recognized legal theory.” Coley v.
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Champion Home Builders Co., et al., 162 N.C. App. 163, 166, 590
S.E.2d 20, 22, disc. review denied, 358 N.C. 542, 599 S.E.2d 41
(2004) (emphasis in original).
Instead of conducting this review, the majority, citing
Parrish v. Bryant, asserts that because part of plaintiffs’
argument differs from the theory “upon which [the] case was tried”
in the trial court, those matters are not properly before us. 237
N.C. 256, 259, 74 S.E.2d 726, 728 (1953). Since the case has not
been tried at all, I believe that this analysis is misplaced.
Rather, as to each of plaintiffs’ claims, our task is to determine
whether plaintiffs have set forth a legal theory under which they
could prevail. As the plaintiffs’ two claims require separate
analysis, they are discussed in turn.
First, plaintiffs have set forth a statutory claim under
Chapter 75, alleging that defendants have engaged in unfair and
deceptive acts and practices in or affecting commerce. The
majority uphold the dismissal of this claim, applying common law
principles of standing. However, since this is a statutory claim,
I conclude that such analysis is inappropriate, and the proper
analysis requires determining whether plaintiffs have alleged a
basis for the claim as created by the statute. Essentially,
plaintiffs contend that the defendants advertised their minivans as
the safest in the world, when they knew that they were not, and
that plaintiffs purchased the van based on these representations,
resulting in damages. The pertinent statutory provisions of the
UDTPA are:
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(a) Unfair methods of competition in oraffecting commerce, and unfair or deceptiveacts or practices in or affecting commerce,are declared unlawful.
(b) For purposes of this section, ‘commerce’includes all business activities, howeverdenominated, but does not include professionalservices rendered by a member of a learnedprofession.
(c) Nothing in this section shall apply toacts done by the publisher, owner, agent, oremployee of a newspaper, periodical or radioor television station, or other advertisingmedium in the publication or dissemination ofan advertisement, when the owner, agent oremployee did not have knowledge of the false,misleading or deceptive character of theadvertisement and when the newspaper,periodical or radio or television station, orother advertising medium did not have a directfinancial interest in the sale or distributionof the advertised product or service.
(d) Any party claiming to be exempt from theprovisions of this section shall have theburden of proof with respect to such claim.
N.C. Gen. Stat. § 75-1.1 (2001). In addition, treble damages are
authorized under this chapter:
If any person shall be injured or the businessof any person, firm or corporation shall bebroken up, destroyed or injured by reason ofany act or thing done by any other person,firm or corporation in violation of theprovisions of this Chapter, such person, firmor corporation so injured shall have a rightof action on account of such injury done, andif damages are assessed in such case judgmentshall be rendered in favor of the plaintiffand against the defendant for treble theamount fixed by the verdict.
N.C. Gen. Stat. § 75-16 (2001). Standing to bring a claim under
this chapter has been conferred by the legislature, and the nature
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of such claims has been further clarified by decisions interpreting
these sections.
An action for unfair or deceptive acts orpractices is ‘the creation of...statute. Itis, therefore, sui generis.’ . . .
In discussing the purpose of the statute, ourSupreme Court has stated: Such legislationwas needed because common law remedies hadproved often in effective . . . .
Bernard v. Central Carolina Truck Sales, Inc., 68 N.C. App. 228,
230, 314 S.E.2d 582, 584, disc. review denied, 311 N.C. 751, 321
S.E.2d 126 (1984) (internal citations omitted).
Most recently in Coley, this Court explained Chapter 75 claims
as follows:
Unfair or deceptive acts or practices in oraffecting commerce are unlawful in NorthCarolina. N.C. Gen. Stat. 75-1.1 (2003). Toprevail on a claim for unfair and deceptivetrade practices, plaintiffs must show: (1) anunfair or deceptive act or practice; (2) in oraffecting commerce; (3) which proximatelycaused actual injury to plaintiffs. Canady v.Mann, 107 N.C. 252, 260, 419 S.E.2d 597, 602(1997). Thus, to recover damages, plaintiffsmust prove they suffered actual injury as aresult of defendant’s unfair and deceptiveact. See Mayton v. Hiatt’s Used Cars, Inc.,45 N.C.206, 212, 262 S.E.2d 860, 864, disc.rev. denied, 300 N.C. 198, 269 S.E.2d 624(1980).
Actual injury may include the loss of the useof specific and unique property, the loss ofany appreciated value of the property, andsuch other elements of damages as may be shownby the evidence. Poor v. Hill, 138 N.C. App.19, 34, 530 S.E.2d 838, 848 (2000).
Coley, 162 N.C. App. at 166, 590 S.E.2d at 22. In Coley, as here,
the issue on appeal was whether the plaintiffs had sufficiently
alleged damages to survive a motion to dismiss. The plaintiffs
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alleged that they had purchased mobile homes which lacked a
required safety feature. Plaintiffs alleged that they were damaged
by purchasing a system that does not meet HUDstandards, and they will incur expenses toprocure a replacement system to properlysecure their homes.
The sole issue argued by the parties to thisappeal is whether plaintiffs have made asufficient allegation of actual injury tosurvive a motion to dismiss for failure tostate a claim . . . .
Id at 165, 590 S.E.2d at 22. This Court then held that the
plaintiffs’ allegations of costs that they had incurred or would
incur to repair the defect were “sufficient allegation[s] of actual
injury to state a claim for unfair and deceptive trade practices.”
Id at 167, 590 S.E.2d at 22.
Because I see no meaningful distinction between Coley and the
case before us, I conclude that we are bound to follow Coley and
reverse the order of dismissal as to Count I of plaintiffs’
complaint. None of the purported distinctions listed by the
majority relate to the issue before us, which is whether the
complaint sufficiently alleged injury to proceed as an unfair and
deceptive trade practice claim. Indeed, the majority at no point
actually addresses this issue. In addition, the majority rejects
the plaintiffs’ allegations for future expenses as “hypothetical,”
“speculative” and not yet realized. Because the types of damages
alleged are virtually identical to those deemed sufficient in
Coley, I do not believe we have the authority to hold otherwise.
In re Civil Penalty, 324 N.C. 373, 384, 379 S.E.2d 30, 36 (1989).
Thus, I cannot agree with the analysis.
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Plaintiffs also cite several unpublished opinions from other
states, involving identical claims and the very same defendants,
brought under the unfair and deceptive trade practices statutes of
California, Tennessee and Pennsylvania. Angelino v.
DaimlerChrysler Corp., No. GIC 785729 (Cal. Sup. Ct., San Diego
County (11 December 2002)); Bell v. DaimlerChrysler Corp., No.
CV003457 (Tenn. Cir. Ct., Cumberland County (4 June 2002)); Solarz
v. DaimlerChrysler Corp., No. 2033 (Penn. CCP (13 March 2002)).
Although we are not bound by these decisions, they add further
support for my conclusion that the allegations here are sufficient
to withstand dismissal. Indeed, the allegations of actual injury
in Solarz are identical to those here, and the court there held
that the plaintiffs had sufficiently alleged damages for their
claims of violations of the relevant unfair and deceptive trade
practices statute.
In addition, although the majority contends that plaintiffs
did not argue statutory standing for their claims of unfair and
deceptive trade practices either before the business court or this
Court, the record reflects otherwise. The first specific mention
of standing in this record is in the oral argument before the
business court. “A challenge to standing is an affirmative
defense. . . .” 61A Am Jur 2d PLEADING § 316 (2004); see also
Woolard v. Davenport, 166 N.C. App. 129, 133, 601 S.E.2d 319, 322
(2004); Merrick v. Peterson, 143 N.C. App. 656, 658, 548 S.E.2d
171, 173 (2001). The first opportunity for plaintiff to address
this issue after alleging their causes of action in the complaint,
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came after the defendants raised the defense. Assuming arguendo
that the defendant has adequately raised this defense, plaintiffs
responded. The transcript of the argument shows defense counsel
stated the following:
And in the absence of any other actual injury. . . there is no – there is simply nostanding.
There was some discussion in the plaintiffs’opposition brief about the standing cases thatwe relied on being factually inapposite, but –and they are to some extent factuallydifferent scenarios. . . .
Thus, it is apparent that plaintiffs did respond when necessary to
the allegations of lack of standing, both in the opposition brief
and in the oral argument to the business court, and again in their
brief to this Court. Here, the first two sections of argument in
plaintiffs’ brief on appeal address the issue of their standing to
pursue their statutory claims under Chapter 75. The issue was
appropriately raised and argued both in the business court and
here.
To the extent that the majority treats the issue of the
sufficiency of the pleadings to state a statutory Chapter 75 claim
as an issue of standing to pursue a tort claim, I conclude that the
discussion is misplaced. A claim under Chapter 75 is not a tort
claim, but is a creature of the legislature, with a distinct
purpose. That purpose has been described as follows:
We think it was the clear intention of the1969 General Assembly in enacting Ch. 833,among other things, to declare deceptive actsor practices in the conduct of any trade or
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commerce in North Carolina unlawful, toprovide civil means to maintain ethicalstandards of dealing between persons engagedin business and the consuming public withinthis State, and to enable a person injured bydeceptive acts or practices to recover trebledamages from a wrongdoer.
Hardy v. Toler, 24 N.C. App. 625, 630-631, 211 S.E.2d 809, 813,
modified, 288 N.C. 303, 218 S.E.2d 342 (1975). Because I conclude
that plaintiffs sufficiently allege a claim for violations of this
statute and for damages, consistent with these precedents and with
the purpose of Chapter 75, I would reverse the dismissal of this
claim.
Turning to plaintiffs’ claim for fraud, Count II in the
complaint, I dissent on this issue as well. The majority opinion
does not address the determinative issue on this count, which is
whether the complaint alleges common law fraud sufficiently to
survive a motion to dismiss under Rule 12(c). The plaintiffs argue
on appeal that the business court erred by dismissing their fraud
claims. They maintain that the “economic loss doctrine” has never
been applied to common law fraud claims in North Carolina and
should not be extended to do so here. Although the majority does
not address this issue, I would reverse the dismissal of
plaintiffs’ fraud claim on the pleadings, and would specifically
hold that the economic loss doctrine does not apply to claims for
common law fraud.
As defendant points out, “North Carolina has adopted the
economic loss rule, which prohibits recovery for economic loss” in
some kinds of tort actions. Moore v. Coachman Industries, 129 N.C.
-29-
App. 389, 401, 499 S.E.2d 772, 780 (1998). This Court in Moore
applied the doctrine to the negligence claims brought against a
manufacturer, which plaintiffs here have not claimed. Id. at 402,
499 S.E.2d at 780. The defendant here concedes that the North
Carolina appellate courts have not applied the economic loss rule
to claims based on fraud or Chapter 75. I do not believe that we
should extend the doctrine, as such a holding is not justified by
precedent, nor by logic or sound policy.
In Moore, for example, the Court applied the doctrine to bar
the claim for negligence which resulted in no personal injury.
However, our courts have often allowed fraud claims in which the
damage was economic. See Chicopee, Inc. V. Sims Metal Works, Inc.,
98 N.C. App. 423, 391 S.E.2d 211, disc. review denied, 327 N.C.
426, 395 S.E.2d 674 (1990) (adopting the doctrine and applying it
to claims for negligence); Wilson v. Dryvit Systems, Inc., 206 F.
Supp.2d 749 (E.D.N.C. 2003) (declining to apply the doctrine to
claims for fraud); Canady v. Mann, 107 N.C. App. 252, 419 S.E.2d
597 (1992) (holding that the economic losses were recoverable when
plaintiff was fraudulently induced to purchase a worthless piece of
land). In Wilson, the Court was given the opportunity to apply the
rule to claims for fraud and unfair and deceptive trade practices,
but declined to do so. In fact, the only ruling that we can locate
which applies the economic loss doctrine to bar a claim for fraud
is the decision of the business court below.
Aside from the lack of precedent to justify such a ruling, I
conclude that the majority decision is contrary to sound reasoning
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and to the policy considerations that underlie fraud and the
economic loss doctrine, as well as Chapter 75. In claims for
negligence, where the doctrine has been applied, the wrong for
which plaintiffs seek redress is the breach of a duty of reasonable
care in design and traditionally the harm is either personal injury
or property damage. In claims for fraud on the other hand, the
wrong addressed is the alleged misrepresentation by a defendant,
relied upon by the plaintiff and typically resulting in an
expenditure of money. Thus, the loss involved in a fraud claim is
very often economic.
Under the [economic loss] rule, a plaintiffwho can claim only economic damages withoutbeing able to show any personal or propertydamage will not be allowed to bring a tortaction for the loss, and must look tocontract, warranty, and statutory actionsinstead. Courts use the rule to separatecontract law, ‘which is designed to enforcethe expectancy interests of the parties,’ fromtort law” which is designed to keep personsfrom ‘causing physical harm’ to others.
National Consumer Law Center, Unfair and Deceptive Trade Practices
Manual, S. 4.2.16.2. (6 Edition 2004) (quoting Casa Clara Condoth
Ass’n v. Charley Toppino & Sons, Inc., 620 So.2d 1244, 1246 (Fla.
1993)).
Most courts will not apply the economic lossrule to bar claims that the defendantfraudulently induced the transaction. Thesecourts reason that the purpose of the rule, tolimit parties to contract remedies, is notpromoted when fraud has undermined theconsumer’s ability to freely negotiate theterms and remedies of the contract.
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Id. I would apply the same reasoning here and hold that the
economic loss rule does not bar plaintiffs’ claims for fraud.
Further, to the extent that the ruling below implicitly
applies the economic loss doctrine to the Chapter 75 claim, I would
specifically reject that application as well.
The rule has generally been used to bar onlytort claims; most courts have held that theeconomic loss rule does not apply to UDAP[UDTPA] claims. UDAP claims are exempt fromthe economic loss rule because the rule isjudicial, not legislative, and must give wayto specific legislative policy pronouncementallowing damages for economic loss. In otherwords, by enacting a remedy for economiclosses suffered by reason of an act deemedwrongful by the statute, the legislature haseffectively preempted the economic loss rulefor those cases covered by the act. To applythe economic loss rule to UDAP claims wouldeffectively eviscerate the statute. Thelegislature could hardly have intended thatthe rule would bar the very claims the UDAPstatute created.
Id. (emphasis added). Since, in North Carolina, unfair and
deceptive trade practices claims include, but are not limited to,
claims involving fraud, this reasoning applies to the fraud claim
as well. See Holley v. Coggin Pontiac, 43 N.C. App. 229, 241, 259
S.E.2d 1, 9, disc. rev. denied, 298 N.C. 806, 261 S.E.2d 919
(1979).
In sum, I would reverse the dismissal on the pleadings of both
claims and remand for further proceedings.